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BioTime, Inc. (BTX): Are Hedge Funds Right About This Stock?

Al Green

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was BioTime, Inc. (NYSEAMEX:BTX).

BioTime, Inc. (NYSEAMEX:BTX) investors should be aware of a decrease in hedge fund interest of late. BTX was in 5 hedge funds' portfolios at the end of the third quarter of 2018. There were 8 hedge funds in our database with BTX holdings at the end of the previous quarter. Our calculations also showed that BTX isn't among the 30 most popular stocks among hedge funds.

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

CITADEL INVESTMENT GROUP

Let's take a look at the recent hedge fund action surrounding BioTime, Inc. (NYSEAMEX:BTX).

How have hedgies been trading BioTime, Inc. (NYSEAMEX:BTX)?

Heading into the fourth quarter of 2018, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -38% from one quarter earlier. By comparison, 11 hedge funds held shares or bullish call options in BTX heading into this year. With the smart money's capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

No of Hedge Funds With BTX Positions

More specifically, Broadwood Capital was the largest shareholder of BioTime, Inc. (NYSEAMEX:BTX), with a stake worth $70.4 million reported as of the end of September. Trailing Broadwood Capital was DAFNA Capital Management, which amassed a stake valued at $0.2 million. Citadel Investment Group, Two Sigma Advisors, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.

Because BioTime, Inc. (NYSEAMEX:BTX) has experienced falling interest from the aggregate hedge fund industry, we can see that there were a few hedgies who sold off their entire stakes heading into Q3. Interestingly, Jim Simons's Renaissance Technologies dropped the biggest investment of all the hedgies followed by Insider Monkey, worth an estimated $0.3 million in stock. Warren Lammert's fund, Granite Point Capital, also cut its stock, about $0.1 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds heading into Q3.

Let's check out hedge fund activity in other stocks similar to BioTime, Inc. (NYSEAMEX:BTX). We will take a look at Central Valley Community Bancorp (NASDAQ:CVCY), Endeavour Silver Corp. (CAN) (NYSE:EXK), Nordic American Tanker Ltd (NYSE:NAT), and Gold Resource Corporation (NYSEAMEX:GORO). This group of stocks' market values are similar to BTX's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CVCY,4,17413,1 EXK,5,13563,0 NAT,6,4844,0 GORO,7,10926,-3 Average,5.5,11687,-0.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.5 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $71 million in BTX's case. Gold Resource Corporation (NYSEAMEX:GORO) is the most popular stock in this table. On the other hand Central Valley Community Bancorp (NASDAQ:CVCY) is the least popular one with only 4 bullish hedge fund positions. BioTime, Inc. (NYSEAMEX:BTX) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. In this regard GORO might be a better candidate to consider a long position.

Disclosure: None. This article was originally published at Insider Monkey.

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